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Obama sends Wall St a message with nomination for SEC head

Mary Jo White, President Obama's nominee to lead Securities and Exchange Commission, is an ex-prosecutor known for catching wrongdoers

PUBLISHED : Saturday, 26 January, 2013, 12:00am
UPDATED : Saturday, 26 January, 2013, 7:04am
 

In nominating former federal prosecutor Mary Jo White to head the US Securities and Exchange Commission, President Barack Obama has aimed a strong message at potential Wall Street miscreants: watch out.

His administration has faced criticism for not being more aggressive in holding bankers and other executives accountable for their actions leading up to the financial crisis. In White, Obama has someone with a long track record of successfully going after wrongdoers.

"You don't want to mess with Mary Jo," Obama said as he announced the nomination on Thursday.

Obama amplified his decision by renominating Richard Cordray, a former state attorney general, as director of the Consumer Financial Protection Bureau. Cordray's controversial recess appointment to the two-year-old agency expires at the end of the year.

Obama said that White and Cordray were key to implement the 2010 overhaul of financial regulations and protect consumers and the financial system from the "kinds of abuse that nearly brought the economy to its knees".

"But it's not enough to change the law," Obama said at the White House, flanked by White and Cordray. "We also need cops on the beat to enforce the law."

If confirmed, White would be the first former prosecutor to lead the SEC. The job normally goes to securities lawyers, regulators or politicians.

She would be the permanent replacement for Mary Schapiro, who stepped down as SEC chairwoman in December. Obama had temporarily elevated SEC Commissioner Elisse Walter to the agency's top position.

White, 65, brings an impressive enforcement résumé. She was the first woman to hold the prestigious position of US attorney for the Southern District of New York, with an office just blocks from Wall Street.

In that job from 1993 to 2002, she prosecuted insider traders, drug traffickers and terrorists, including those involved in the 1993 World Trade Centre attack and the 1998 bombings of two US embassies in Africa.

"She is a tough, experienced prosecutor, which is exactly what the SEC needs right now to restore investor confidence," New York attorney general Eric Schneiderman said.

Jonathan Corpina, senior managing partner of Meridian Equity Partners, welcomed tougher enforcement.

"When you get the bad eggs out, that's positive for any industry," said Corpina, who also is a trader on the floor of the New York Stock Exchange. "Main Street has an image of Wall Street that needs to be cleaner."

White has spent the last decade in private practice, defending companies and executives accused of white-collar crime or securities law violations. Among her clients was former Bank of America chief executive Ken Lewis.

She explained her philosophy last year at a New York University forum, titled "Did felons get a free pass in the financial crisis?"

"You should be aggressive where there is crime, but what you should not do is fail to distinguish between what is actually criminal and what is just mistaken behaviour, what is even reckless risk-taking, and not bow to the frenzy," she said.

Barbara Roper, director of investor protection for the Consumer Federation of America, said she hoped White's time as a defence lawyer hadn't softened her views on financial wrongdoing.

"She has a reputation for being a very smart and aggressive prosecutor. She similarly has a reputation for being a smart and aggressive defence attorney," Roper said. "The hope is she will bring those same qualities to her new job as the head of the SEC and set aside that defence attorney mentality and embrace the role of regulator."

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